Question 1

The slope of a curved line can be approximated by

Accepted Answer

A)  the average of the variable measured along the y-axis divided by the average of the variable measured along the x-axis. 
B)  the inverse of the straight-line method. 
C)  the average of the variable measured along the x-axis divided by the average of the variable measured along the y-axis. 
D)  the slope across an arc from one point on the curve to another point on the curve.

Question 2

If the x-axis variable increases while the y-axis variable decreases, the variables x and y are negatively related.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a positive statement?

Accepted Answer

A)  Taxes should be lower because then people get to keep more of what they earn. 
B)  My economics class should last for two terms because it is my favorite class. 
C)  A 10 percent increase in income leads to a 4 percent increase in the consumption of beef. 
D)  Given their negative impact on productivity, the government should eliminate labor unions.

Question 4

All economic questions arise because we

Accepted Answer

A)  want more than we can get. 
B)  want more than we need. 
C)  have an abundance of resources. 
D)  have limited wants that need to be satisfied.

Question 5

An economic model is

Accepted Answer

A)  a generalization that summarizes all the normative assumptions we make about a particular issue. 
B)  a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand. 
C)  a statement that describes how the world should be. 
D)  a collection of facts that describe the real world.

Question 6

Which factor of production earns profit?

Accepted Answer

A)  land 
B)  human capital 
C)  money 
D)  entrepreneurship

Question 7

Scarcity is

Accepted Answer

A)  our inability to satisfy all our wants. 
B)  a situation that exists during economic recessions but not during economic booms. 
C)  eliminated by choices. 
D)  an economic problem only for poor people.

Question 8

Scarcity applies to both the rich and the poor.

Accepted Answer

A) True 
 B)False

Question 9

-The slope of the line in the above figure is

Accepted Answer

A)  1/2 = 0.5. 
B)  2. 
C)  -1/2 = -0.5. 
D)  -2.

Question 10

-In the above, as the y variable increases

Accepted Answer

A)  the x variable is constant. 
B)  the x variable increases. 
C)  the x variable decreases. 
D)  the x variable at first increases but then decreases.

Question 11

Suppose that the government of New York state promises to decrease taxes to a firm if it decides to stay in New York instead of moving to another state. This policy on the part of the state constitutes ________, to make the ________ of the firm remaining in New York.

Accepted Answer

A)  an incentive; marginal benefit exceed the marginal cost 
B)  an incentive; marginal cost exceed the marginal benefit 
C)  a command; marginal benefit exceed the marginal cost 
D)  a command; marginal cost exceed the marginal benefit

Question 12

-The slope in the above figure is

Accepted Answer

A)  negative and increasing. 
B)  negative and decreasing. 
C)  positive and increasing. 
D)  positive and decreasing.

Question 13

Factors of production include

Accepted Answer

A)  the economic system. 
B)  land, labor, capital and entrepreneurship. 
C)  labor and capital (not land, which is fixed). 
D)  only capital, land, and labor.

Question 14

Which of the following is a normative statement?

Accepted Answer

A)  Next year's inflation rate will be under 4 percent. 
B)  Consumers will buy more gasoline over the Christmas holiday even if the price of gas is 10 cents higher than it was during the Thanksgiving holiday. 
C)  The government's cuts in welfare spending impose an unfair hardship on the poor. 
D)  The current butter surplus is the result of federal policies.

Question 15

A positive statement is

Accepted Answer

A)  about what ought to be. 
B)  about what is. 
C)  always true. 
D)  one that does not use marginal concepts.

Question 16

-In the above figure, which of the graphs demonstrates a curve with a decreasing slope, that is, a slope getting smaller in magnitude as x increases?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 17

Because we face scarcity, every choice involves

Accepted Answer

A)  money. 
B)  the question "what." 
C)  giving up something for nothing. 
D)  an opportunity cost.

Question 18

Today, Julie attended her 12:30 Economics class. If she hadn't gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julie's opportunity cost of going to class is the

Accepted Answer

A)  income from working she gave up. 
B)  lunch she gave up. 
C)  sleep she gave up. 
D)  income from working, lunch, and sleep she gave up.

Question 19

When Susan makes the statement, "The government should spend less money to take care of national parks," she is

Accepted Answer

A)  making a normative statement. 
B)  making a positive statement. 
C)  testing an economic model. 
D)  not dealing with scarcity.

Question 20

Human capital is

Accepted Answer

A)  all capital owned by individuals, but not by corporations or governments. 
B)  all capital owned by individuals or corporations, but not by governments. 
C)  machinery that meets or exceeds federal safety standards for use by humans. 
D)  the skill and knowledge of workers.

Exam 1: What Is Economics